Ameren (AEE) vs. Public Service Enterprise Group (PEG) Financial Comparison

Ameren (NYSE: AEE) and Public Service Enterprise Group (NYSE:PEG) are both large-cap utilities companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, dividends, analyst recommendations, risk, institutional ownership, earnings and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Ameren and Public Service Enterprise Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameren 2 3 2 0 2.00
Public Service Enterprise Group 0 7 9 0 2.56

Ameren presently has a consensus target price of $58.83, indicating a potential upside of 5.99%. Public Service Enterprise Group has a consensus target price of $51.58, indicating a potential upside of 3.40%. Given Ameren’s higher probable upside, research analysts plainly believe Ameren is more favorable than Public Service Enterprise Group.

Insider and Institutional Ownership

69.8% of Ameren shares are held by institutional investors. Comparatively, 68.4% of Public Service Enterprise Group shares are held by institutional investors. 0.4% of Ameren shares are held by company insiders. Comparatively, 0.6% of Public Service Enterprise Group shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Ameren has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500. Comparatively, Public Service Enterprise Group has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Profitability

This table compares Ameren and Public Service Enterprise Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameren 8.47% 9.43% 2.72%
Public Service Enterprise Group 17.33% 11.25% 3.63%

Dividends

Ameren pays an annual dividend of $1.83 per share and has a dividend yield of 3.3%. Public Service Enterprise Group pays an annual dividend of $1.80 per share and has a dividend yield of 3.6%. Ameren pays out 64.7% of its earnings in the form of a dividend. Public Service Enterprise Group pays out 61.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Ameren has increased its dividend for 4 consecutive years and Public Service Enterprise Group has increased its dividend for 6 consecutive years. Public Service Enterprise Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Ameren and Public Service Enterprise Group’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ameren $6.18 billion 2.18 $523.00 million $2.83 19.61
Public Service Enterprise Group $9.08 billion 2.77 $1.57 billion $2.93 17.02

Public Service Enterprise Group has higher revenue and earnings than Ameren. Public Service Enterprise Group is trading at a lower price-to-earnings ratio than Ameren, indicating that it is currently the more affordable of the two stocks.

Summary

Public Service Enterprise Group beats Ameren on 14 of the 17 factors compared between the two stocks.

About Ameren

Ameren Corporation is a utility holding company. The Company’s subsidiaries include Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). It operates through four segments. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment consists of the aggregated electric transmission businesses of Ameren Illinois and ATXI. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Illinois operates rate-regulated electric distribution, electric transmission and natural gas distribution businesses in Illinois. ATXI operates a Federal Energy Regulatory Commission rate-regulated electric transmission business.

About Public Service Enterprise Group

Public Service Enterprise Group Incorporated (PSEG) is a holding company. The Company is an energy company with operations located primarily in the Northeastern and Mid-Atlantic United States. The Company’s segments include Public Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power) and Other. PSEG is engaged in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is also the provider of last resort for gas and electric commodity service for end users in its service territory. Power is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses through energy sales in energy markets and fuel supply functions primarily in the Northeast and Mid-Atlantic United States through its principal subsidiaries. In addition, Power owns and operates solar generation in various states.

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